Guide to Conservative Investing

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It gives us great pleasure to present you with this ‘Guide to Conservative Investing’, which highlights fundamental insights on low-risk investing, otherwise known as low volatility investing. The publication also sheds light on the Robeco Conservative Equities strategy, which offers clients a low-risk solution through a multi-factor defensive approach. According to theory, long-term risk and return go hand in hand, meaning higher systematic risk results in higher returns. However, in practice we have seen that this relationship is actually flat or even negative and probably results in the most fundamental and robust anomaly in finance. Defensive low-risk strategies are designed to exploit this premium and play an increasingly important role in equity portfolios: by lowering the overall portfolio risk, by further diversifying the equity portfolio, or by offering a defensive approach to dividend investing. In this guide, we first set the scene by outlining why low-risk investing works by touching on our research on and insights into the low volatility effect – one of the key risk factors in the Conservative Equities model – and how it has gained prominence over the years.